About halfway through the Canyonlands ride, I was by myself on a flat section of slick rock with amazing views in every direction when I was struck by the most brilliant business idea I'd ever had. I stopped, got off my mountain bike, and started jumping up and down and yelling as loud as I could. That moment of inspiration would become a company named Talk!Technologies—leveraging the then-novel concept of viral marketing to create the world's first voice portal to the internet. I thought I'd taken a billion-dollar bike ride. The next six months were the hardest of my life. My son Charlie died in January 1997. Three months later, my dad died, too, and I was hit with a $2 million tax lien. I lost my house and cars and was completely broke. I was wiped out both financially and emotionally. But I had my billion-dollar business idea. Besides my children, it was the only thing that kept me going.
I pitched my mentor, David Nemelka, and he agreed to invest $100,000. Following his suggestion, I brought in three other partners, and each of us split the remaining stock of a company named Talk!Technologies four ways. We patented the idea of "virus marketing," and we went on to build the first voice portal to the internet, using voice recognition just as Siri and Alexa do today.
Fueled by the 1990s internet boom, we raised $75 million for the company. At one point, we ran a full-page ad in the Wall Street Journal that cost $100,000. The first line of copy read, "Dear John, Bernie, and Ed." "John" was John T. Chambers, CEO of Cisco Systems. "Bernie" was Bernie J. Ebbers, CEO of WorldCom. (He later served thirteen years of a twenty-five-year sentence for defrauding investors.) And "Ed" was Edward J. Zander, president and COO of Sun Microsystems. The rest of the ad basically said, "Hey, we're doing something really cool and you guys should be part of it. Call us."
Everyone called. Larry Ellison, the cofounder of Oracle Corporation, invested; and Hewlett-Packard and Sun Microsystems got in a bidding war to see which would invest in the company. We ended up going with HP, which gave us $10 million in computers. Of the $75 million we raised, $10 million went to building a state-of-the-art network operations center in Salt Lake City.
We were off and running—or so we thought. I'll finish the story later. First, let me share a story about David and then two of the key lessons I've learned about handling failure.
* * *
IT'S NOT WHETHER THEY'RE LOVED...
This is one of my David Nemelka stories. It's not related to the chapter content. But it's beautiful.
Time after time, when I was having a problem with one of my kids, I would drive to Mapleton, sit with David, and watch him think it through. David always used farm and nature metaphors to explain his thinking.
"Jeff, if you have a tree that gets bent by the wind," he said, "you need to tie it to a stake for a while as it gains strength. Once it's strong, you don't need the tie. But if it is going to bend or break again, it tends to do so in the same spot."
When my stepson Dane was in junior high school, I'd get calls from his teacher telling me that he'd fallen asleep during class. David's advice: Go to his class, pull up a chair, and sit next to him. If he falls asleep, lift his head.
Sure enough, Dane had to test it. When the teacher called again, I drove to the junior high, pulled up a chair, and sat with my arm around him to make sure he stayed awake. It only took a couple of times before he got the message.
It wasn't actually about keeping him awake during class. The real message was that I loved him enough to take the time to sit beside him in class, humiliating as that was for him.
"It's not whether you love the kids," David said. "It's whether they feel loved."
* * *
HEDGE YOUR BETS
By definition, entrepreneurs are optimists, and most behave as if failure isn't an option. That couldn't be more wrong. Failure is always an option. You obviously don't set out to fail, and you shouldn't be thinking about failing while you're working on an idea, but you do need to be honest with yourself about the level of risk you're taking on and be prepared in case your idea flops. It's essential that we understand the pitfalls we're inevitably going to face.
Here's why I say this: No one marries planning to divorce, but wealthy singles now routinely get prenups, and for good reason. Half of marriages end in divorce. As an entrepreneur, your chances are worse. Nine out of ten new businesses fail within the first five years. That's fact. Sooner or later, you're going to fail, and you're likely to fail often.
If you're always willing to push all your chips onto the table, eventually you're going to lose them—every last one. Even if you're right three times in a row, a failure the fourth time will wipe you out. I was a multimillionaire by the age of twenty-nine and broke by the time I was thirty-one. I've had more than a few years where I've made millions followed by years where I've lost everything.
Entrepreneurs are notorious for this. After making $100 million from PayPal, Elon Musk went all in on two moon shots—SpaceX and Tesla. At one point, he was so broke he was sleeping on a friend's couch. Fortunately for him, Tesla eventually turned the corner. As a result, he's now the poster child for entrepreneurs. If Tesla hadn't turned itself around—and it's still not completely out of the woods yet—Musk would be looked on as one of the greatest fools in business history. His is a terribly dangerous model, and most people who follow it will go right off the cliff.
There are ways to play this game without taking a $100 million windfall, risking it all, and losing so much of it you end up on a friend's couch. It all begins with your approach.
This excerpt ends on page 8 of the paperback edition.
Monday we begin the book Anatomy of a Breakthrough: How to Get Unstuck When It Matters Most by Adam Alter.